Poor Homes Hit by Charcoal, Electricity Price Hikes

A charcoal seller awaits customers

May 3, 2018//-The price of charcoal and electricity touched a new high last month, tightening the squeeze on low-income households despite a general decline in the cost of living, newly released economic data shows.

The Kenya National Bureau of Statistics (KNBS) monthly survey found that the price of a 4kg tin of charcoal (mostly used to sell the commodity to low-income households) went up 55.3 per cent to Sh125.48 in April from Sh80 a year ago.

This came in the wake of a recent ban on logging that caused a severe scarcity of charcoal in the marketplace, pushing prices to an all-time high.

Deputy President William Ruto on February 24 suspended logging in government forests and asked Environment secretary Keriako Tobiko to look for a lasting solution to the drying up of rivers — kicking up the prices of timber and related products.

Latest market reports indicate that a bag of charcoal is now retailing at Sh2,500 from an average of Sh1,500 prior to the ban. In many Nairobi estates, buyers are compelled to purchase a whole 90kg bag of charcoal instead of the usual small bits — locking thousands of low-income consumers out of the market.

Charcoal prices have more than tripled since 2008 when the 4kg tin retailed at an average of Sh35, indicating that low-income households have had to dig deeper into their pockets to cook their meals.

Low-income households also incurred huge electricity costs as power bills for homes that consume 50 units of electricity a month crossed the Sh700-mark for the first time this year, making electricity among the basic household items whose price is rising at the fastest rate. Users of 50 units paid Sh745 in April this year — an all-time high — and 26.3 per cent up from the Sh590 it cost in the same period a year earlier.

Electricity prices have a direct bearing on inflation, being one of the items in the basket of goods and services whose pricing is tracked to measure the cost of living.

Power bills have risen for six months in a row and are expected to hit a historic peak this month due to a sharp increase in the fuel cost levy.

Forex charge, which compensates for foreign currency costs, including loans that power producers have in their books, rose 50 per cent to Sh1.44 per kilowatt hour (kWh) of electricity consumed in April, according to data from the Energy Regulatory Commission (ERC).

KNBS data also shows that cooking gas prices have hit a 22-month high, piling pressure on homes that are struggling with high energy prices.

The price of a 13kg liquefied petroleum gas went up 5.28 per cent to Sh2,172 in April compared to Sh2,063 a year ago. Kerosene rose 18.70 per cent to Sh77.68 a litre in April this year compared to Sh65.44 a year ago.

The Energy ministry has asked the Treasury to cut taxes for bottom power users as a way of cushioning poor homes from high costs. Many poor families are already feeling the pinch of high energy prices.

For 32-year-old Florence Wangui, who lives in Kibera, Nairobi, the high price of charcoal and kerosene has meant changing cooking habits for her young family of three.

“We have stopped cooking three meals a day because charcoal and kerosene have become too costly and are beyond our reach,” Ms Wangui said.

Energy secretary Charles Keter Friday last week directed the ERC to create a new tariff structure that will harmonise electricity charges for domestic users.

The Energy ministry also wants the Treasury to slash the 16 per cent value-added tax on electricity.

The cost of electricity under the Uhuru Kenyatta administration is higher compared to the previous one under Mwai Kibaki despite the injection of 280 megawatts of cheaper geothermal energy to the grid, official data reveals.

Average power tariffs shot up to Sh15.65 per kWh in 2017, from Sh14.68 the previous year and from a low of Sh14.38 in 2012, according to Economic Survey 2018.

Kenya’s year-on-year inflation dropped to 3.73 per cent in April from 4.18 per cent last month, touching a five-year low. Business Daily Africa